At this time last year, everyone was fretting about a 2023 recession. That's the kind of setup that led to a 55% rally in the Nasdaq (with some help from AI) and a 24% rally in the S&P 500.
How does the market feel going into 2024?
Recession calls have disappeared, stocks are up nine weeks in a row and there's the Fear & Greed Index.
My base case is that we see rotation from megacap tech into broader indexes or value early in the year but there's a compelling case that there are trillions of dollars on the sidelines that will flow into stocks in 2024.
'Extreme greed' is never a good sign but there has been an extreme change in the fundamentals, with yields dropping, the Fed signalling a pivot and inflation looking like it's dead.
